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What is Life Insurance – All You Need to Know about Life Insurance

Life insurance offers you risk coverage and takes care of monetary needs of your family after your death. Besides providing coverage against all sorts of risks, it gives you an opportunity to grow your investments. It could also be viewed as a long-term investment tool that helps you to save for your child's future expenses or your post retirement expenses.

In legal terms, life insurance is a contract between a policy owner and insurer, wherein the latter agrees to reimburse the occurrence of the insured individual's death or other event such as terminal illness or critical illness. The insured agrees to pay the cost in terms of insurance premium for the service.

TYPES OF LIFE INSURANCE

There are various types of life insurance policies available to aid you in meeting needs of various life stages.

1. Term Life Insurance:

You get coverage for a tenure that you specifically choose. These policies could be availed by people who find it difficult to pay a lump sum amount for endowment assurance policy or whole life policy.

2. Whole Life Insurance:

This policy covers you for as long as you live. You stay protected for your entire life, thus this plan is named as whole life policy.

3. Endowment Policy:

Risk is covered for a specific period and at the end of the period sum assured along with the accumulated bonus, is paid back to the policyholder. Endowment policy pays back the face value of the amount on the insured person's death or after a stipulated number of years. Some policies also make payment in case of critical illness.

4. Money Back Policy:

This policy repays survival benefits periodically during the term of the plan.

5. Savings & Investment Plans:

Help you save and invest to make your money grow.

6. Pension Plans:

This plan is a retirement solution plan and does not cover life insurance. You can build your retirement corpus as per your risk appetite and on completion of the specified period, a certain amount of money is paid to the insured/beneficiary in the form of pension, monthly, half-yearly, or annually.

7. Unit Linked Insurance Plans (ULIPs):

A part of investment goes towards providing life cover, while the residual portion is invested in stocks or bonds. It is a goal-based financial product, which is designed to impart safety and wealth creation opportunities.

8. Child Insurance Policy:

These plans are designed to meet rising education and other needs of children. A child plan offers a lump sum amount on the death of the policyholder, but the policy doesn’t end. All future premiums are waived and insurance company continues investing money on the behalf of policyholder. The child gets the money at specified tenure as planned